How to Refinance a Mortgage and What Are its Benefits?

Posted by elevationmtg on January 16th, 2021

It’s common for homeowners to experience changes in their financial situation many years after signing into a home loan. Such changes are sometimes unavoidable. At some point, you may also need to reduce your current interest rates, cut monthly payments, or tap into your home’s equity. The good news is all of these are achievable through a refinanced mortgage.

Refinancing is a way to replace your current home loan with a new one. Most homeowners use this option for the reasons stated above, such as reducing their interest rates or shortening the term of their mortgage. Others use a refinanced mortgage to switch from an adjustable-rate to a fixed-rate loan.

Do note that refinancing is NOT the same as a reverse mortgage in Denver. Some people confuse these two terms. In this article, we are talking about refinancing, not reverse mortgages.
How does mortgage refinancing work? As always, the first step is to find someone who can help you find the best options for refinancing your home. An experienced mortgage broker is what you need.

Next, you need to assess your situation and options. Make sure to set a clear financial goal. Ask yourself: Why do you want to refinance your mortgage in the first place? Once you’ve understood your goals, it’s time to determine your eligibility. Qualifying for a refinance is relatively simple. All you need is a good credit score and a reliable financial history.

The higher your credit score, the more likely it is for your new loan to get approved. You’ll also need to determine how much home equity you have to get to achieve better loan rates. It’s best for you to obtain quotes from multiple lenders to widen your options; because of this, hiring a top-rated mortgage broker can be helpful.

What are the benefits of refinancing your mortgage? Aside from the lower monthly payments, you’ll be able to pay off your loan much faster than before. You can even shorten your home loan from 30 years down to 15. Additionally, refinancing can help you remove a person from a mortgage in cases of divorce or lack of financial support.

About the author

Elevation Mortgage, LLC is a mortgage broker and we serve loans in Colorado. Our focus is VA loan, FHA loans, Conventional loans and Reverse Loans. Our office is located in Colorado Springs, which is where the majority of our business comes from.